Today, we stand proud as a nation. Today, we turn a page in history. We celebrate the fourth year of martial law with the first session of the Batasang Bayan. We have succeeded to survive and prevail over crisis after crisis. The deterioration of our society threatened by the rebellion four years ago, the secessionism in the south as well as the criminality and anarchy over the land were aborted through the exercise of political will.

The nation stands and the New Society exists, able to cope with adversity and vicissitudes. It has been a triumph not in the sense that we have solved all our problems, but that we have managed to give our national life a determined shape and direction. Our New Society, addressing itself to the neglected rural and urban poor, has enabled the farmers in some areas to double and in some areas to treble their income- Unemployment has considerably decreased—from 7 percent in 1972 to 3.9 percent in the present year. Our people in general have become self-sufficient in staples, while government income has increased from P5.75 billion in 1972 to P22.4 billion this year. Our gross national product this year will grow between 6 to 7 percent between a low of P45.792 billion and a high of P46.244 billion. Per capital income has correspondingly increased. Money supply has grown to 4.1 percent, while inflation was held to an average 5.3 percent after the inflation rate reached 40 percent in 1974 and 1975. Progress has been brought about in a broad range of activities touching upon all facets of life of the Filipinos.

We have reorganized government not only to streamline its institutions, but to eliminate the inefficient and corrupt, the burdens of our bureaucracy, and the entire people.

We will continue this task unrelentingly. We have safeguarded the national fabric not only by dismantling the apparatus of rebellion and of the rightist-leftist conspiracy and by reducing the secessionist movement in the south and by eliminating the private armies and taking over illicitly owned orpossessed firearms, but also by standing watch over still continuing efforts of subversion.

We have implemented the program of agrarian reform, now showing concrete reforms in countryside development. We have pursued our food production program and have achieved self-sufficiency in staple food products.

The strategy in the matter of insurgency and secession was and remain political in the sense that it follows the politics of integration rather then of conflict. We have attempted to show and I believe succeeded in showing that social, economic, political and even cultural grievances can be redressed in a society based on the rebellion of the poor. As the insurgent and secessionist rebels are Filipinos, they can be rewon by a resurgent sense of nationality and renewed sense of society.

Thus, we have met the threats of sedition and secession, giving us lime and opportunity for reconstruction. There is, moreover, added cost for national pride in our new standing in the world arising out of our economic management and our conduct of international relations. Our dollar reserves increased from $25 million in 1972 to $1.2 billion in 1976. On the other hand, investments have poured in from other countries.

We have moved forward making considerable gains in areas where many other nations are meeting difficulty. We have arrested the drift and the internal collapse of our society and have recovered a new sense of direction and purpose, with the visible support of the majority. Where the claims of contending interests and ideologies previously threatened to rend apart our society, today we stand strong at the center, able to rationally reconcile differences, rationalize our decisions, and take determined, concerted actions. This we demonstrated in the recent tragedy that struck the coastal areas and cities of Mindanao, Basilan, Sulu and Tawi-Tawi. With an important portion of our population suffering extensive destruction and the death of thousands of our population—in the last report 8,000 were supposed to have perished—we went into the work of relief, rehabilitation, and reconstruction using mostly the resources generated within our own country by a people moving in united and concerted action. On different occasions, we have seen the same newly discovered capability at work, in varying scale and degree and according to the demands of the hour. It is very much with us today. For today, as peace, political stability, and economic growth remain elusive to most of the world at large, we create the beginning of a new department in our government, the Batasang Bayan. That new department, we hope, will be a legislate department. For it is my purpose that although the Batasang Bayan is considered as an advisory council, it shall act on almost all the important pieces of legislation required by our country. I shall exercise the power of legislation as mandated by the Constitution and the Supreme Court only when and if the Batasang Bayan cannot meet any given contingency.

From September 1972 to the end of 1975, we achieved much more than in the previous 30 years.

This was the time when we began the social democratization of wealth.

This was the time when we entered the deeper consciousness of the Family of Nations, particularly our allies in Asia, Africa, Latin America, or the Third World.

This was the time when our economic performance attracted the attention of international financing institutions and investors, and the country crashed the international market for tourism.

This was the time when we went back to our historical roots in the development of our own indigenous political institutions.

This was the time when we committed the largest sums of our available resources to the socio-economic development of the countryside, and industry, jobs, investments, credit, incomes and education shifted to the great mass of our population in the rural areas.

This was the time when because of the adoption by decree of the long-shelved proposal in Congress for service contracts in oil drilling we discovered oil, uranium, more gold deposits, geothermal power, and mineral deposits throughout the country.

In enforcing martial law, our most difficult task did not lie in immobilizing the enemies of the state, although that in it constituted a formidable task. Rather, it lay in giving a social dimension to all our efforts, so that the energies otherwise spent to spread anarchy and chaos would be transformed into a peaceful and productive force for the making of meaningful reforms.

Therefore, instead of merely seeking to blunt the onslaught of insurgency and rebellion, to crush its armed organization, as we substantially did in the last several years, we sought to extirpate the conditions that sought to give meaning lo the false attractions of such insurgency and rebellion.

Beyond the need to fully restore public order, we sought to increase the level of public welfare.

Beyond conserving resources from the crippling effects of global economic crisis—such as the one in oil—we sought their purposeful utilization in a determined bid to generate employment and incomes for millions of our people under the principle of dynamic flexibility.

And beyond the piecemeal efforts toward social change that had marked our history since independence, we undertook bold programs to create and redistribute both wealth and opportunity, to dismantle the system of privilege that favored the rich and powerful and to encourage the productive participation of millions.

All these called for resolute action, first, in the consolidation of the long-diffused and compromised authority of Government; second, in the restoration of the basic bond between the people and their Government, which had been distorted by a corrupt electoral process and a manipulative system of representation; and third in the reform of the entire machinery of Government administration.

Given the authority to act decisively on any problem area with a minimum of red tape and waste of resources, we were able to implement programs whose thrust and magnitude had previously required more than the resources and energies of Government. Thus at the end of a four-year period, we could see the successful implementation of a number of integrated regional area projects, in addition to those that could only be national in scope, as they addressed themselves to broad social and economic problems. What is the record of these programs? Let us look at them.

Allow me to guide you to look them over one by one.

When we speak of peace and security, we are reminded of the recent capture by the government of the almost legendary leader of the New People’s Army, the return of 26,500 former Mindanao secessionists, the capture and surrender of 6,500 former members of the leftist group and the leftist-rightist conspiracy, the complete elimination of the capability of any group—political, economic, or social—to establish a private army or a nationwide criminal syndicate, the dramatic reduction of crime in Metro Manila, and the reduction of the crime density of 139 per 100,000 population in 1972 down to the level of 51.5 per 100,000 population. All these make us conclude that the grave dangers that have confronted the country four years ago have considerably lessened.

But as I have said repeatedly, military experience in the past and present demonstrates one outstanding fact of contemporary life—the security nations and states will hinge principally upon the success or failure of subversion, massive infiltration with overt alien support, or indigenous rebellion.

Survival and security will, therefore, I repeal, hinge on the manner in which we successfully counteract this de-stabilizing factor which may come from outside our country.

I repeat what I have written before I contended then, as I contend now, that both the insurgents and the secessionist movement were in many respects violent consequences of the rebellion of the poor. As they constitute a socio-economic problem, the strategy likewise has to be principally socio-economic. This was true of the leftist-rightist rebellion, and this is true the secessionist movement in the south.

Today, the strategy must remain the same. It remains political, as I have already said, in the sense that it follows the politics of integration rather than of conflict. We have attempted to show as I have already said, that grievances whether economic, social or political can be redressed by a society with one purpose, and that is, to give social dimension to its progress and advancement.

We have integrated all the police forces of the country, the Integrated National Police Force. And from a national perspective, our national civilian police system has the capability to react with considerable efficiency and sophistication to any reasonable volume of crimes. But, and this we take note of, the reduction of crime is in the final analysis a social question, addressed to the entire society rather than simply to the police enforcers.

This is the burden than exacts a heavy charge on the economic capability of the nation. And it is useful that in our economy the country has made significant gains.

Our dramatic recovery from shortage to self-sufficiency was recorded in our rice production program—Masagana 99. This was the decisive step for the food production effort because rice has always been the crisis sector in our agricultural area. Nor has this thrust been limited alone to the rice and corn production program. At the close of 1975, the total credit channeled to agriculture had reached P7.7 billion. This was a decisive transfer of resources to the agricultural sector that had never thought of or undertaken in all the years of existence of our country and our Republic.

All these proved some merit in our bias for a balanced agro-industrial economy.

In the industrial sector, we instituted a new industrial plan that stressed the rectification of imbalances generated by early policies and the restructuring of industry in a manner conducive to sound and accelerated growth. In the new plan, industrial development was stimulated by the following policies:

— the promotion of export-oriented industries;

— the encouragement of labor intensive industries and techniques of production;

— the promotion of backward integration in the industrial sector;

— the regional dispersal of industries; and

— the promotion of small- and medium-scale industries.

This period saw the establishment and efficient management of the Board of Investments and the creation of the Department of Industry that guided the way towards industrial progress throughout the land.

Because of the recasting of our incentives program for oil drilling through the Exploration Act of December, 1972, adopting the system of oil sharing on the basis of a service contract under which the oil driller commits himself to drill so many number of holes within a certain period in a given area, oil has been discovered in at least two places in the Philippines. One in Palawan with the Calamian group of islands on March 11, 1976, and the other at the Reed Bank west of Palawan on July 30, 1976. I need not state that the discoveries and possibly the exploitation of these oil deposits may completely alter the economic planning for the development of the entire country.

The energy program, however, goes beyond the search for oil, into the development of new energy sources, as well as alternative and indigenous resources, such as coal, natural gas and gas liquids, geothermal resources, nuclear fuel reserves, hydro, solar and other non-conventional sources. As I have said, uranium has been reportedly found in the Bicol area, Samar, Ilocos and Mindanao. With 74 percent of our fuel requirements coming from petroleum, five percent from hydroelectric power and only a small percentage from other fuels, and 86 percent of such petroleum requirements coming from the Middle East, it is in our national interest to find dependable safeguards against the vagaries of international oil politics, not to speak of cartel taxes, in finiteness of resources, and the conservation programs of exporting countries.

In the last three-and-a-half years, foreign equity investments approved by the Board of Investments have doubled, if not trebled. Even more impressive has been the growth of gross domestic capital formation.

In 1973, gross domestic formation totalled P7,800 million representing 20.1 percent of Gross National Product and a 14.4 percent increase over the previous year’s figure. In 1974, this rose further to P9,447 million, represent­ing 23. 1 percent of GNP and a 21.1 percent increase over the 1973 level. At the close of 1975. domestic investment rose even more dramatically to P12.197 million, a phenomenal rise by 29.1 percent and representing 28.2 percent of GNP.

Monetary and banking reforms, calculated to play a vital role in domestic capital formation, proved a vigorous instrument for growth. The policy encouraging mergers and consolidation of medium size banks not only increased their capitalization, but also defamiliarized many of these Finns, thereby broadening the base of their ownership—in themselves, independent areas of reforms. The redirection of credit to priority areas in agriculture, agrarian reform, exports and small scale industries, created for monetary policy a progressive new role in social and economic reform.

Today, a significant part of growth is steadily being channeled towards further economic activities. Domestic and foreign investors continue to have a strong confidence in the growth prospects of the national economy.

Now let me go to social equity.

In the fulfillment of our development vision, we make it a precondition that the security and well-being of our people must come first.

This was the first and overriding task of our national development plan; and in a very real sense, all our programs were parts of this effort to provide for social equity.

There is not any program of Government that is not directed towards granting growing social dimension to the efforts of both the public and the private sectors.

Since 1972, we have instituted various measures, some of them radical, intended to democratize the benefits of development among our people and to provide the social and economic infrastructure that would improve our people’s capacity to contribute to production, and to meaningfully share in the fruits of production.

The measures taken include not merely those which directly affect the distribution of income and wealth. They also include those which expand the opportunities of the lower classes of our people for employment, advancement, recreation, and education.

In fulfilling this social vision, we ruled out the expropriation of wealth and its redistribution among our people in the form of welfare wages. We sought more lasting change and improvement of human welfare, centered on the person’s productive capacities and initiative.

For this purpose, we placed the greatest emphasis on social transformation of the steady growth of opportunities for individual fulfillment.

The cornerstone of this policy is agrarian reform which we have expressly addressed to our rural poor who had labored for centuries under a feudalistic, land system. Immediately after the martial law proclamation, we declared the entire country a land reform area. Less than a month later, on 21 October 1972, we declared the full emancipation of the tenant from bondage to the land he tilled.

This was only as it should be. For quite apart from historical reasons a full 27 million—or nearly 65 percent of our population—are dependent on agriculture.

Our land reform program specifically encompassed rice and corn lands, which historically had been the stronghold of share tenancy, and upon which some 13.5 million depend. Involved in the program were 496,357 tenants.

In four years, we have transferred all lands covered by the decree to this new system of tenure. Lands expropriated were distributed to the tenants, and as of today, 294,885 titles covering an area of 340,347 hectares have already been transferred to 188,642 tenant recipients. Parallel to this, on lands of 7 hectares or less allowed the landlord, we have fully implemented their conversion to the leasehold system of tenure.

The other component of agrarian reform covers land consolidation and settlements. Eight priority areas have been proclaimed as new settlements. As of today, 40 agricultural settlements of 701,251 hectares and involving 47,772 families have been established. New settlements have been set up in 118.045 hectares with 3,575 settlers.

In the case of plantation crop areas, which have been exempted from land reform because of the advantage of large-scale cultivation, we have sought equity for agricultural labor in terms of profit sharing, higher wages and better working conditions.

Supporting agrarian reform is the cooperatives development program which seeks specifically to ensure the productive fanning of the land by the newly liberated tenants. In declaring a fresh effort towards cooperatives, we have sought to correct the failure of previous programs and to institute a system of implementation based on stages of rural workers’ organization, which progressively intensified farmer participation in cooperation endeavors,

In 1960, 6.3 percent of our total labor force was unemployed. In 1968, it rose to an all time high of 7.9 percent. By February 1975, this has been brought down to 3.6 percent.

The key to the reversal of the level of unemployment in our country was the expansion of economic activities in all sectors of the economy but it was expansion that was directed with definitive bias on the side of labor. Our basic development strategy stressed the increasing absorption of labor in gainful economic activities. Development must create more jobs and increase the security of a livelihood for every employable member of society. In our case, we must generate some 400,000 jobs a year, if we are to keep the pace of our development.

Along with these basic reforms towards social transformation, we have expanded the level of social services in education, health and nutrition, family planning, housing and environmental planning. All of our programs are in line with the entire development effort.

In education, we have begun the fundamental realignment of our educational system towards the manpower requirements of development, the upgrading of the quality of education, and the full democratization of educational opportunity.

No child today is deprived of the opportunity to learn. The yearly expansion of our school enrolment is matched by increases in our school facilities and in our teaching force. And the provision for a free subsidized education has periodically been stretched upward to higher levels of schooling.

To answer the manpower needs of development, and the employment Opportunities of our manpower, we have invested heavily in vocational and technical schools, in schools for adult education, in barrio high schools and in manpower training centers. We have scholarships both for the cultural minorities and for the majority. We have grantees, stale scholars, science scholars, and special scholars numbering by the thousands. As a part of the grantees or scholars from the cultural minorities, there are more than 7,000 government subsidized scholars as of today. We have programmed the establishment of a Science High School in each of the country’s 13 regions, to increase the output of graduates, which number 6,000 a year as of now,

And in higher education, emphasis has been given on the screening of applicants for college studies and the improvement of the quality of educational deliveries. State facilities have been vastly expanded, and attention has been given to the development of more agricultural universities.

Health, nutrition, family planning, and environment programs have been integrated into our programs of social services.

Our program to arrest the high birth rate squarely relates to the level of welfare within the access of every citizen and the increments of growth generated by the expansion of economic activities. From the 3.1 percent population growth rate registered at the start of 1973, our programs for population planning have been able to bring it down to 2.6 percent.

In this particular matter a member of the Batasang Bayan and, incidentally, the Governor of Metro Manila, is to be thanked for the family planning program.

Most all observers realize and understand that while we are apparently concentrating on the increase in production as well as in the growth of the Gross National Product, a corresponding obsession should arise among our population with respect to family planning and the control of the growth of our population.

In this campaign against malnutrition, we have designed and implemented what no less than the UN University has called “the most comprehensive program of applied nutrition at the village level yet undertaken by any country.” This report notes that the program has “contributed in three years to an improvement of nutrition and health in the Philippines.”

I need not go into the increase in per capita calorie consumption. Suffice it to say the education program of the Nutrition Center of the Philippines, did well to solve all nutrition problems even without the necessity of increasing special food production.

Finally, we have implemented a comprehensive program for the housing of our population. As a first step, we have consolidated the diverse efforts of many agencies engaged in housing programs under a National Housing Authority. Secondly, we have increased apace our squatters resettlement efforts in order to decongest the urban areas especially Metropolitan Manila which seems to have a monopoly of the squatters of this country. And thirdly, we have redirected housing policy to the provision of home for low-income groups,

One of the results of the last science convention on the subject of the Survival of Humankind: The Philippine Experiment was the indication that we may have cheaper material for low-cost housing in the Philippines. And this cheap material may be the sulphur that we see in our volcano—the silver lining in the clouds.

The World Bank report indicates that the lowest cost of a house is probably P28,000. But if we could use sulphur, probably we could bring down the cost of every dwelling to P5,000 or P10,000.

Finally, we have restructured the basic thrust of our social welfare programs towards curative and restorative projects. These projects have been designed to alleviate the broad base of mass poverty, but they embody schemes for the productive utilization of the energies of the needy even of the handicapped. It is not a scheme of merely granting doles and creating mendicants, but a scheme rather of infusing character into all the members of our nation.

All these programs of social reforms and social services converge on the total vision of social and economic equality. We have by no means banished poverty from our midst, but we can certainly say that our people have not been denied equity in growth and participation in productive labor, and equal opportunity in education.

Now, let us go to foreign relations.

The exacting tasks of domestic problems have not turned inward the outlook of this nation. Side by side with our domestic programs for social, economic and political development, and integral to them, we have moved decisively to develop our relations with the rest of the world.

Throughout the world, change has been the theme of the decade.

The international economic environment has been visited by crises of a kind and scale unprecedented in history. From the initial shock of the energy crisis, the world has braced itself against the onslaught of global recession, of commodity shortages including food, of international monetary disorder, and of sustained challenge to the world economic order.

On another front, the system of alliances on which the fragile peace and security of the world was based was disintegrating, and in its place new arrangements based on different perceptions of global realities were emerging.

But long before the challenge was upon us, we correctly read the inexorable course of global affairs. Before events could make the decisions for us, weundertook the necessary effort of seizing control over our foreign policy and of revising the very framework of our relations with the rest of the world, it was action necessitated and engendered by the thrust of domestic policies toward independence, innovation, and total self-reliance.

Identifying geopolitical realities and national priorities, we shaped the cornerstones of a new foreign policy. The first and most fundamental of these stressed the supremacy of national interests in the conduct of foreign affairs.

Secondly, we stressed the need for flexibility and pragmatism in our diplomacy, to encompass not merely our hopes for peace and security, but our wry aspirations to development- And thirdly, we stressed the need for contacts with all nations desiring our friendship on the basis of mutual respect and mutual benefit.

In our relations with the Western countries, particularly the United States with whom our ties are deep and strong, we have sought and found a new relationship compatible with emerging realities in Asia and in our respective circumstances. We have just entered, a crucial stage in the renegotiation of our Mutual Defense Agreement, our bases treaty, our military assistance agree­ment, and our economic ties.

With Southeast Asia, with whom we seek the deepest and closest ties, we have developed and contributed to the building of a strong regional association in the Association of Southeast Asian Nations. The historic agreements in Bali this year are the culmination of almost a decade of nurturing Southeast Asia’s essential homogeneity, and the commencement of a regional effort that is of far-reaching value to the security and development prospects of all Asian peoples and countries.

With the Socialist world, we have forged vigorous and harmonious relations with the great majority of Socialist countries, including the People’s Republic of Soviet Socialist Republics which I visited this year, and the Socialist Republic of Vietnam whose delegation headed by Vice Minister of Foreign Relations Pham Hien visited with us the other month after which visit normal diplomatic relations between our countries were established. Differences of ideology have in no way constricted the possibilities of com­merce and cultural exchange, and we are finding with every passing year that these countries provide new markets and sources of supply of enormous signif­icance to our development effort.

With the Japan, the European Economic Community, and the industrialized West, we have continued to nurture a strong and close relationship, particularly in trade and investments. From these countries have flowed substantial capital investments in the national economy that make them truly effective partners in our bid for national development.

Finally, we have closely identified ourselves with the cause of the Third World countries in seeking a new international economic order and in improving upon the system of cooperation among countries of similar circumstances and aspirations. With these countries we have found a coalition of interests and aspirations that is perhaps the most important phenomenon in international affairs today. We have sought to forge the same ties with the Islamic countries, with countries in the Middle East, in Africa and in Latin America.

For beyond the memories of shared social experiences and of shared des­titution and misery, we have in association found the levers for creating changes in our conditions and in terms of international economic life.

Barely a year ago we hosted the historic Ministerial Conference of the Group of 77, which prepared the position of the Third World for the United Nations Conference on Trade and Development. Last May, it was our great privilege to present to that conference the Declaration and Programme of Action in the UNCTAD meeting in Nairobi.

The sum of these initiatives in foreign policy is a diplomacy placed at the service of national development, and imbued with a vision of the interdepend­ence of nations. In four years we have constructed methodically a network of relations with many countries that confers benefits upon the national life and that in no way has endangered our sense of well-being and security.

And more than this, we have won for ourselves and our nation the respect and the goodwill of the great majority of the human family. And that is not a mean achievement at a time when many speak of competition among the na­tions for the resources of this planet.

We have made ground-breaking progress in all these spheres of national life, because we have a Government that truly governs. Behind every stride we have taken in securing the peace, in spurring the economy towards growth, in spreading the benefits of growth among our people, and in promoting our commerce and contact with the rest of the world is the recovery and the strengthening of political will in this country.

For the conditions that invoked the martial necessity derived from a long period of decay in our political system and political institutions. All the sound and glossy qualities of democratic process that marked our political life for generations were merely the crust of an unequal political order which proved finally unable to respond to national realities and problems. As vested interests manipulated the apparatus of power and the disaffected majority agitated for some measure of political control, our government steadily drifted towards paralysis and in many cases abdication. We have sought to reorganize government as I have stated at the beginning of this speech.

Perhaps the most important aspect of reorganization was the creation of the National Economic Development Authority which gathered under one roof the planning of national development. From this office have originated the plans and programs of our New Society.

The merit of this new administrative structure has been fully shown, in the operations of our various programs. Admittedly, there is need for more managerial skills which take time to generate. But the new orientation is there; the capacity to act is there; and the sense of a single organization at work marks the government we have in our country today.

The harmonious flow of policies to programs, of responsibilities from the Presidency of the smallest Government unit, underlies at root, the progress we have made in our national development program.

Allied with the responsibility of government to plan and manage national development is the task to generate and harness resources effectively. And thus we have raised the revenues of government from P1.0 billion in 1965 when I look over the Presidency to P16.5 billion in the just concluded fiscal year.

Without the efforts to increase the fiscal base of the economy, the accomplishments of government in the field of public investments would have been severely curtailed. The limits of our efforts must necessarily be circumscribed by the extent to which we improve the base of government in­come.

During the last four years, public investments have been poured heavily into public services especially into the infrastructure development program which are designed to expand the productive capacity of the economy. Public investment expenditures have risen to about 38 percent of the total expenditures of the national government. In the earlier years of my administration, the most that we could reach was close to 20 percent. In a period of four to five years, we have doubted public investment in infrastructure development.

In 1976 alone, total national government spending has amounted to P23.2 billion. Of this, public infrastructure programs have received an allocation in excess ofP8 billion. Included here are not only the all-important farm to market roads, which became a total link between farmer and consumer, but irrigation, electrification and water resources projects. By the end of 1977, we expect to have established one electric cooperative in each province. By 1984, we should be able to energize all the barrios; and total electrification should come by 1990. As of now, our electrification program has registered 65 electric cooperatives, serving 386,363 homes in 361 municipalities. In waterworks, 68 projects have so far been identified; 30 of which are programmed for implementation within the next two years. The plan is for investments in these areas to grow over time as the development program accelerates.

But where have we spent all this money? Significantly, there has also been a clear shift in the regional pattern of public investments. In the Fifties and Sixties, public investments were concentrated in Region IV, comprising Southern Luzon including Metro Manila, which received on the average almost half of total public investments. From FY 1971 to 1975, the region’s share in public capital expenditure has declined to only about 28 percent of the total, without any decrease in the actual amount involved. In per capita terms, it ranked only fourth, trailing Regions III (Central Luzon), VIII (Eastern Visayas) and II (Cagayan Valley).

This is seen in the simultaneous development of regional integrated projects, such as the ones in the Bicol river basin area, Mindoro, Cagayan Valley, Panay Island, Samar and Leyte, Zamboanga and other parts of Mindanao.

The decline of the importance of Region IV derives from the decline of per capita public investments in the Metro Manila area—notwithstanding the fad that here, in this prime city of the Philippines, we see the most palpable examples and manifestations of government expenditures. In FY 1972, per capita expenditure in the Metropolis was P33.60. In FY 1975, this went down to P23.41. On the other hand, for the rest of the Philippines the public investments rose from P20.21 in FY 1972, to P90.00 in FY 1975. This is by way of a rejoinder to those who think that all the public money having been spent only in Metro Manila.

The pattern of revenue utilization exemplifies the basic spirit of our national development program—the emphasis on the demoralization of wealth, the regionalization of growth, and the linkage of all sectors of the national eco­nomy. We seek in the plan the regeneration not of just one part, but of the whole society and the whole economy. And no region, no community, no individual has been left out from the compass of the entire development effort.

This shift of expenditures to the rural areas has brought about a strong government presence in places where there hardly was any perception of it before. The establishment of the regional offices of all the departments of government proved to be far-sighted.

What are the future perspectives? Let me quote the recent World Bank country report. And I quote: “There is little question,” says a recent World Bank country report, “that the Philippines has the physical and human resources required for the sustained economic improvement during the next few decades and its more equitable distribution. Moreover, recent economic and social reforms have contributed to a policy environment more conducive to sustained economic growth . . .”

But what we have achieved is simply part of the initial stages of our total national development. We must plan ahead and so what are these plans in the years ahead?

By 1980, we should expect the basic infrastructure of growth to be completed, linking the fanner, the small industries and the consumers to the total domestic economy. By the year 2000, we should have attained our objective of integrating our socially fragmented nation, through our socio-economic and political programs, the development or adoption of institutions and appropriate technologies to ensure standards of harmony and well-being within the national community.

At the end of the millennium, our population shall have increased to 83.4 million people. Although, as the Family Planning program puts it, we are trying to bring this down to 55 million. This will need an annual GNP growth rate of 7 per cent in real terms to support reasonable living standards. Energy con­sumption alone will rise to five times the level of our consumption in 1975. As fossil fuels from outside sources are depleted, we will need to develop our own resources. We will need an added hydro-electric capacity of at least 5,400 megawatts, nine times our present capacity of 600 mw., or three plants of 300 mw. each being put on stream every four years. Of geothermal resources, we will need some 80 plants of 55 mw. each to meet our target of 400 mw. by year 2000. We have just started to put 255 mw. generators in Tiwi and 2 in Bae, Laguna. We will need 14 million metric tons of coal, which means 20 mines regularly producing 2000 tons per day. Uranium exploration should intensify to support the nuclear power subsystem, where we will need three to four additional units of l.000 mw. each to meet our requirements. Oil drilling must produce at least 250 wells over the next ten years. This energy development program is expected to cost S24 billion over the next 25 years.

In agriculture, we must realize at least a 4 per cent growth in food production during the next decade, by expanding arable and harvested areas, and increasing yields. To attain increased productivity we well have to adopt or develop new and appropriate technologies, organize and manage more efficiently our extension services, commit large-scale investments to water re­sources, fertilizer, communication and transport, and rationalize pricing.

We must also utilize an increasing part of our resources to farm the seas for the “blue revolution” of the immediate future. There are those who have misgivings about increasing our food production because of the inadequacy of our land area. This year, we are starting the farming of the sea. With relatively productive marine resources in an area of 1,655,300 square kilometers we should be able to bring about such a revolution, just as in the last ten years we were able to bring about through our high-yielding varieties, the green revolution.

In industry, we must support our objective of higher industrial growth with investments in relatively labor-intensive finished consumer goods industries, the second stage of import substitution for selected intermediate and capital goods industries, and the generation of exports. We must create sufficient jobs to absorb the present ranks of the unemployed, and the 400.000 annual addition to the labor force. Public investments must increase to about 5 per cent of the GNP by 1980, particularly in the area of housing. There must continue to be reform in taxation to reduce the heavy dependence on international trade and correspondingly widen the domestic base as well as improve the social equity of the entire tax system.

In government, reorganization must continue as a constant mechanism for envigorating me bureaucracy. The planning capacity of Government, beginning at the center and including its various departments and agencies, should improve, training of middle managers should continue to be upgraded, systems of rewards and punishment and of enlarging accountability instituted. Public corporations should encourage greater public participation, and local participation in the decision-making process should continue to broaden.

To keep pace with the changing rural to urban profile of our communities, we must exert every effort to liberate these communities from blight, conges-lion, and hazards; bring about the optimum use of land as a welfare rather than as a commodity for trade; preserve a desirable balance between the natural beauty of our land and waters on the one land and the claims of technology on the other; and bring about the best possible inter-relationship among the various communities and the regions.

By 1980, it is predicted that Manila may have expanded so much that it may include Infanta, Quezon province. This will be a city, therefore, two sides of which are harbors. One on the Pacific Ocean and one on Manila Bay or the China Sea side.

By the year 2000, Manila Bay should not be polluted. By the year 1980, we should be half-way with the reclamation of 100,000 hectares in the northern part of Manila Bay, part of which should be utilized for high quality marine products in sea farming, in the fishponds that shall be allocated thereat. Bataan may have developed into an industrial area, Cavite and Batangas into tourist recreation resorts. A canal may have been dug at Atimonan, a 7-kilometer canal across the isthmus from the Pacific Ocean to Tayabas Bay, thus shortening the way for ocean-going ships travelling from the Pacific to Manila Bay.

Education must continue as a high priority, not only within the schools, bin outside the school system. This calls for a more judicious use of public media and other facilities in the task of adult, or out-of-school education. Through vigorous educational campaigns, we should succeed in orienting our popula­tion to our increasing social development goals. By 1985, we should succeed in reducing the population growth rate to about 2.4 per cent, if not less, and in eliminating wasteful and dangerous consumption habits particularly in food, energy, space, water and air.

We should in all aspects of our national life seek to promote more vigorously the ethic of self-reliance, from security to technology, from agri­cultural to industrial production.

As I see it, this decade and the next will set the stage for expanding our country’s productive infrastructure. We shall witness new gains in agriculture, the development of higher standards in our manpower, the institutionalization of development management in our public and private sectors, a common thrust toward full agro-industrial modernization. We shall see new levels of income, rationalization of our technological problems and capabilities, new standards of living, and a different quality of life, particularly among those who live a marginal social existence as of now.

We have the natural resources, we have the manpower. We have the programs and above all, we have the political will.

Let us without equivocation unite behind these programs. They deserve the support of all. For whatever we achieve tomorrow can only mean progress if it transforms the life of the poor. Our task is to see within the shortest possible time the final emancipation of the poor of our country.

“We Stand Proud as a Nation Today”

Message to the Batasang Bayan

Of His Excellency Ferdinand E. Marcos

President of the Philippines

On the State of the Nation

[September 21, 1976]

In accordance with the traditions of all legislative bodies, the Head of State or Head of Government submits a Report to the nation at the opening session of its legislative body.

Today, we stand proud as a nation. Today, we turn a page in history. We celebrate the fourth year of martial law with the first session of the Batasang Bayan. We have succeeded to survive and prevail over crisis after crisis. The deterioration of our society threatened by the rebellion four years ago, the secessionism in the south as well as the criminality and anarchy over the land were aborted through the exercise of political will.

The nation stands and the New Society exists, able to cope with adversity and vicissitudes. It has been a triumph not in the sense that we have solved all our problems, but that we have managed to give our national life a determined shape and direction. Our New Society, addressing itself to the neglected rural and urban poor, has enabled the farmers in some areas to double and in some areas to treble their income- Unemployment has considerably decreased—from 7 percent in 1972 to 3.9 percent in the present year. Our people in general have become self-sufficient in staples, while government income has increased from P5.75 billion in 1972 to P22.4 billion this year. Our gross national product this year will grow between 6 to 7 percent between a low of P45.792 billion and a high of P46.244 billion. Per capital income has correspondingly increased. Money supply has grown to 4.1 percent, while inflation was held to an average 5.3 percent after the inflation rate reached 40 percent in 1974 and 1975. Progress has been brought about in a broad range of activities touching upon all facets of life of the Filipinos.

We have reorganized government not only to streamline its institutions, but to eliminate the inefficient and corrupt, the burdens of our bureaucracy, and the entire people.

We will continue this task unrelentingly. We have safeguarded the national fabric not only by dismantling the apparatus of rebellion and of the rightist-leftist conspiracy and by reducing the secessionist movement in the south and by eliminating the private armies and taking over illicitly owned orpossessed firearms, but also by standing watch over still continuing efforts of subversion.

We have implemented the program of agrarian reform, now showing concrete reforms in countryside development. We have pursued our food production program and have achieved self-sufficiency in staple food products.

The strategy in the matter of insurgency and secession was and remain political in the sense that it follows the politics of integration rather then of conflict. We have attempted to show and I believe succeeded in showing that social, economic, political and even cultural grievances can be redressed in a society based on the rebellion of the poor. As the insurgent and secessionist rebels are Filipinos, they can be rewon by a resurgent sense of nationality and renewed sense of society.

Thus, we have met the threats of sedition and secession, giving us lime and opportunity for reconstruction. There is, moreover, added cost for national pride in our new standing in the world arising out of our economic management and our conduct of international relations. Our dollar reserves increased from $25 million in 1972 to $1.2 billion in 1976. On the other hand, investments have poured in from other countries.

We have moved forward making considerable gains in areas where many other nations are meeting difficulty. We have arrested the drift and the internal collapse of our society and have recovered a new sense of direction and purpose, with the visible support of the majority. Where the claims of contending interests and ideologies previously threatened to rend apart our society, today we stand strong at the center, able to rationally reconcile differences, rationalize our decisions, and take determined, concerted actions. This we demonstrated in the recent tragedy that struck the coastal areas and cities of Mindanao, Basilan, Sulu and Tawi-Tawi. With an important portion of our population suffering extensive destruction and the death of thousands of our population—in the last report 8,000 were supposed to have perished—we went into the work of relief, rehabilitation, and reconstruction using mostly the resources generated within our own country by a people moving in united and concerted action. On different occasions, we have seen the same newly discovered capability at work, in varying scale and degree and according to the demands of the hour. It is very much with us today. For today, as peace, political stability, and economic growth remain elusive to most of the world at large, we create the beginning of a new department in our government, the Batasang Bayan. That new department, we hope, will be a legislate department. For it is my purpose that although the Batasang Bayan is considered as an advisory council, it shall act on almost all the important pieces of legislation required by our country. I shall exercise the power of legislation as mandated by the Constitution and the Supreme Court only when and if the Batasang Bayan cannot meet any given contingency.

From September 1972 to the end of 1975, we achieved much more than in the previous 30 years.

This was the time when we began the social democratization of wealth.

This was the time when we entered the deeper consciousness of the Family of Nations, particularly our allies in Asia, Africa, Latin America, or the Third World.

This was the time when our economic performance attracted the attention of international financing institutions and investors, and the country crashed the international market for tourism.

This was the time when we went back to our historical roots in the development of our own indigenous political institutions.

This was the time when we committed the largest sums of our available resources to the socio-economic development of the countryside, and industry, jobs, investments, credit, incomes and education shifted to the great mass of our population in the rural areas.

This was the time when because of the adoption by decree of the long-shelved proposal in Congress for service contracts in oil drilling we discovered oil, uranium, more gold deposits, geothermal power, and mineral deposits throughout the country.

In enforcing martial law, our most difficult task did not lie in immobilizing the enemies of the state, although that in it constituted a formidable task. Rather, it lay in giving a social dimension to all our efforts, so that the energies otherwise spent to spread anarchy and chaos would be transformed into a peaceful and productive force for the making of meaningful reforms.

Therefore, instead of merely seeking to blunt the onslaught of insurgency and rebellion, to crush its armed organization, as we substantially did in the last several years, we sought to extirpate the conditions that sought to give meaning lo the false attractions of such insurgency and rebellion.

Beyond the need to fully restore public order, we sought to increase the level of public welfare.

Beyond conserving resources from the crippling effects of global economic crisis—such as the one in oil—we sought their purposeful utilization in a determined bid to generate employment and incomes for millions of our people under the principle of dynamic flexibility.

And beyond the piecemeal efforts toward social change that had marked our history since independence, we undertook bold programs to create and redistribute both wealth and opportunity, to dismantle the system of privilege that favored the rich and powerful and to encourage the productive participation of millions.

All these called for resolute action, first, in the consolidation of the long-diffused and compromised authority of Government; second, in the restoration of the basic bond between the people and their Government, which had been distorted by a corrupt electoral process and a manipulative system of representation; and third in the reform of the entire machinery of Government administration.

Given the authority to act decisively on any problem area with a minimum of red tape and waste of resources, we were able to implement programs whose thrust and magnitude had previously required more than the resources and energies of Government. Thus at the end of a four-year period, we could see the successful implementation of a number of integrated regional area projects, in addition to those that could only be national in scope, as they addressed themselves to broad social and economic problems. What is the record of these programs? Let us look at them.

Allow me to guide you to look them over one by one.

When we speak of peace and security, we are reminded of the recent capture by the government of the almost legendary leader of the New People’s Army, the return of 26,500 former Mindanao secessionists, the capture and surrender of 6,500 former members of the leftist group and the leftist-rightist conspiracy, the complete elimination of the capability of any group—political, economic, or social—to establish a private army or a nationwide criminal syndicate, the dramatic reduction of crime in Metro Manila, and the reduction of the crime density of 139 per 100,000 population in 1972 down to the level of 51.5 per 100,000 population. All these make us conclude that the grave dangers that have confronted the country four years ago have considerably lessened.

But as I have said repeatedly, military experience in the past and present demonstrates one outstanding fact of contemporary life—the security nations and states will hinge principally upon the success or failure of subversion, massive infiltration with overt alien support, or indigenous rebellion.

Survival and security will, therefore, I repeal, hinge on the manner in which we successfully counteract this de-stabilizing factor which may come from outside our country.

I repeat what I have written before I contended then, as I contend now, that both the insurgents and the secessionist movement were in many respects violent consequences of the rebellion of the poor. As they constitute a socio-economic problem, the strategy likewise has to be principally socio-economic. This was true of the leftist-rightist rebellion, and this is true the secessionist movement in the south.

Today, the strategy must remain the same. It remains political, as I have already said, in the sense that it follows the politics of integration rather than of conflict. We have attempted to show as I have already said, that grievances whether economic, social or political can be redressed by a society with one purpose, and that is, to give social dimension to its progress and advancement.

We have integrated all the police forces of the country, the Integrated National Police Force. And from a national perspective, our national civilian police system has the capability to react with considerable efficiency and sophistication to any reasonable volume of crimes. But, and this we take note of, the reduction of crime is in the final analysis a social question, addressed to the entire society rather than simply to the police enforcers.

This is the burden than exacts a heavy charge on the economic capability of the nation. And it is useful that in our economy the country has made significant gains.

Our dramatic recovery from shortage to self-sufficiency was recorded in our rice production program—Masagana 99. This was the decisive step for the food production effort because rice has always been the crisis sector in our agricultural area. Nor has this thrust been limited alone to the rice and corn production program. At the close of 1975, the total credit channeled to agriculture had reached P7.7 billion. This was a decisive transfer of resources to the agricultural sector that had never thought of or undertaken in all the years of existence of our country and our Republic.

All these proved some merit in our bias for a balanced agro-industrial economy.

In the industrial sector, we instituted a new industrial plan that stressed the rectification of imbalances generated by early policies and the restructuring of industry in a manner conducive to sound and accelerated growth. In the new plan, industrial development was stimulated by the following policies:

— the promotion of export-oriented industries;

— the encouragement of labor intensive industries and techniques of production;

— the promotion of backward integration in the industrial sector;

— the regional dispersal of industries; and

— the promotion of small- and medium-scale industries.

This period saw the establishment and efficient management of the Board of Investments and the creation of the Department of Industry that guided the way towards industrial progress throughout the land.

Because of the recasting of our incentives program for oil drilling through the Exploration Act of December, 1972, adopting the system of oil sharing on the basis of a service contract under which the oil driller commits himself to drill so many number of holes within a certain period in a given area, oil has been discovered in at least two places in the Philippines. One in Palawan with the Calamian group of islands on March 11, 1976, and the other at the Reed Bank west of Palawan on July 30, 1976. I need not state that the discoveries and possibly the exploitation of these oil deposits may completely alter the economic planning for the development of the entire country.

The energy program, however, goes beyond the search for oil, into the development of new energy sources, as well as alternative and indigenous resources, such as coal, natural gas and gas liquids, geothermal resources, nuclear fuel reserves, hydro, solar and other non-conventional sources. As I have said, uranium has been reportedly found in the Bicol area, Samar, Ilocos and Mindanao. With 74 percent of our fuel requirements coming from petroleum, five percent from hydroelectric power and only a small percentage from other fuels, and 86 percent of such petroleum requirements coming from the Middle East, it is in our national interest to find dependable safeguards against the vagaries of international oil politics, not to speak of cartel taxes, in finiteness of resources, and the conservation programs of exporting countries.

In the last three-and-a-half years, foreign equity investments approved by the Board of Investments have doubled, if not trebled. Even more impressive has been the growth of gross domestic capital formation.

In 1973, gross domestic formation totalled P7,800 million representing 20.1 percent of Gross National Product and a 14.4 percent increase over the previous year’s figure. In 1974, this rose further to P9,447 million, represent­ing 23. 1 percent of GNP and a 21.1 percent increase over the 1973 level. At the close of 1975. domestic investment rose even more dramatically to P12.197 million, a phenomenal rise by 29.1 percent and representing 28.2 percent of GNP.

Monetary and banking reforms, calculated to play a vital role in domestic capital formation, proved a vigorous instrument for growth. The policy encouraging mergers and consolidation of medium size banks not only increased their capitalization, but also defamiliarized many of these Finns, thereby broadening the base of their ownership—in themselves, independent areas of reforms. The redirection of credit to priority areas in agriculture, agrarian reform, exports and small scale industries, created for monetary policy a progressive new role in social and economic reform.

Today, a significant part of growth is steadily being channeled towards further economic activities. Domestic and foreign investors continue to have a strong confidence in the growth prospects of the national economy.

Now let me go to social equity.

In the fulfillment of our development vision, we make it a precondition that the security and well-being of our people must come first.

This was the first and overriding task of our national development plan; and in a very real sense, all our programs were parts of this effort to provide for social equity.

There is not any program of Government that is not directed towards granting growing social dimension to the efforts of both the public and the private sectors.

Since 1972, we have instituted various measures, some of them radical, intended to democratize the benefits of development among our people and to provide the social and economic infrastructure that would improve our people’s capacity to contribute to production, and to meaningfully share in the fruits of production.

The measures taken include not merely those which directly affect the distribution of income and wealth. They also include those which expand the opportunities of the lower classes of our people for employment, advancement, recreation, and education.

In fulfilling this social vision, we ruled out the expropriation of wealth and its redistribution among our people in the form of welfare wages. We sought more lasting change and improvement of human welfare, centered on the person’s productive capacities and initiative.

For this purpose, we placed the greatest emphasis on social transformation of the steady growth of opportunities for individual fulfillment.

The cornerstone of this policy is agrarian reform which we have expressly addressed to our rural poor who had labored for centuries under a feudalistic, land system. Immediately after the martial law proclamation, we declared the entire country a land reform area. Less than a month later, on 21 October 1972, we declared the full emancipation of the tenant from bondage to the land he tilled.

This was only as it should be. For quite apart from historical reasons a full 27 million—or nearly 65 percent of our population—are dependent on agriculture.

Our land reform program specifically encompassed rice and corn lands, which historically had been the stronghold of share tenancy, and upon which some 13.5 million depend. Involved in the program were 496,357 tenants.

In four years, we have transferred all lands covered by the decree to this new system of tenure. Lands expropriated were distributed to the tenants, and as of today, 294,885 titles covering an area of 340,347 hectares have already been transferred to 188,642 tenant recipients. Parallel to this, on lands of 7 hectares or less allowed the landlord, we have fully implemented their conversion to the leasehold system of tenure.

The other component of agrarian reform covers land consolidation and settlements. Eight priority areas have been proclaimed as new settlements. As of today, 40 agricultural settlements of 701,251 hectares and involving 47,772 families have been established. New settlements have been set up in 118.045 hectares with 3,575 settlers.

In the case of plantation crop areas, which have been exempted from land reform because of the advantage of large-scale cultivation, we have sought equity for agricultural labor in terms of profit sharing, higher wages and better working conditions.

Supporting agrarian reform is the cooperatives development program which seeks specifically to ensure the productive fanning of the land by the newly liberated tenants. In declaring a fresh effort towards cooperatives, we have sought to correct the failure of previous programs and to institute a system of implementation based on stages of rural workers’ organization, which progressively intensified farmer participation in cooperation endeavors,

In 1960, 6.3 percent of our total labor force was unemployed. In 1968, it rose to an all time high of 7.9 percent. By February 1975, this has been brought down to 3.6 percent.

The key to the reversal of the level of unemployment in our country was the expansion of economic activities in all sectors of the economy but it was expansion that was directed with definitive bias on the side of labor. Our basic development strategy stressed the increasing absorption of labor in gainful economic activities. Development must create more jobs and increase the security of a livelihood for every employable member of society. In our case, we must generate some 400,000 jobs a year, if we are to keep the pace of our development.

Along with these basic reforms towards social transformation, we have expanded the level of social services in education, health and nutrition, family planning, housing and environmental planning. All of our programs are in line with the entire development effort.

In education, we have begun the fundamental realignment of our educational system towards the manpower requirements of development, the upgrading of the quality of education, and the full democratization of educational opportunity.

No child today is deprived of the opportunity to learn. The yearly expansion of our school enrolment is matched by increases in our school facilities and in our teaching force. And the provision for a free subsidized education has periodically been stretched upward to higher levels of schooling.

To answer the manpower needs of development, and the employment Opportunities of our manpower, we have invested heavily in vocational and technical schools, in schools for adult education, in barrio high schools and in manpower training centers. We have scholarships both for the cultural minorities and for the majority. We have grantees, stale scholars, science scholars, and special scholars numbering by the thousands. As a part of the grantees or scholars from the cultural minorities, there are more than 7,000 government subsidized scholars as of today. We have programmed the establishment of a Science High School in each of the country’s 13 regions, to increase the output of graduates, which number 6,000 a year as of now,

And in higher education, emphasis has been given on the screening of applicants for college studies and the improvement of the quality of educational deliveries. State facilities have been vastly expanded, and attention has been given to the development of more agricultural universities.

Health, nutrition, family planning, and environment programs have been integrated into our programs of social services.

Our program to arrest the high birth rate squarely relates to the level of welfare within the access of every citizen and the increments of growth generated by the expansion of economic activities. From the 3.1 percent population growth rate registered at the start of 1973, our programs for population planning have been able to bring it down to 2.6 percent.

In this particular matter a member of the Batasang Bayan and, incidentally, the Governor of Metro Manila, is to be thanked for the family planning program.

Most all observers realize and understand that while we are apparently concentrating on the increase in production as well as in the growth of the Gross National Product, a corresponding obsession should arise among our population with respect to family planning and the control of the growth of our population.

In this campaign against malnutrition, we have designed and implemented what no less than the UN University has called “the most comprehensive program of applied nutrition at the village level yet undertaken by any country.” This report notes that the program has “contributed in three years to an improvement of nutrition and health in the Philippines.”

I need not go into the increase in per capita calorie consumption. Suffice it to say the education program of the Nutrition Center of the Philippines, did well to solve all nutrition problems even without the necessity of increasing special food production.

Finally, we have implemented a comprehensive program for the housing of our population. As a first step, we have consolidated the diverse efforts of many agencies engaged in housing programs under a National Housing Authority. Secondly, we have increased apace our squatters resettlement efforts in order to decongest the urban areas especially Metropolitan Manila which seems to have a monopoly of the squatters of this country. And thirdly, we have redirected housing policy to the provision of home for low-income groups,

One of the results of the last science convention on the subject of the Survival of Humankind: The Philippine Experiment was the indication that we may have cheaper material for low-cost housing in the Philippines. And this cheap material may be the sulphur that we see in our volcano—the silver lining in the clouds.

The World Bank report indicates that the lowest cost of a house is probably P28,000. But if we could use sulphur, probably we could bring down the cost of every dwelling to P5,000 or P10,000.

Finally, we have restructured the basic thrust of our social welfare programs towards curative and restorative projects. These projects have been designed to alleviate the broad base of mass poverty, but they embody schemes for the productive utilization of the energies of the needy even of the handicapped. It is not a scheme of merely granting doles and creating mendicants, but a scheme rather of infusing character into all the members of our nation.

All these programs of social reforms and social services converge on the total vision of social and economic equality. We have by no means banished poverty from our midst, but we can certainly say that our people have not been denied equity in growth and participation in productive labor, and equal opportunity in education.

Now, let us go to foreign relations.

The exacting tasks of domestic problems have not turned inward the outlook of this nation. Side by side with our domestic programs for social, economic and political development, and integral to them, we have moved decisively to develop our relations with the rest of the world.

Throughout the world, change has been the theme of the decade.

The international economic environment has been visited by crises of a kind and scale unprecedented in history. From the initial shock of the energy crisis, the world has braced itself against the onslaught of global recession, of commodity shortages including food, of international monetary disorder, and of sustained challenge to the world economic order.

On another front, the system of alliances on which the fragile peace and security of the world was based was disintegrating, and in its place new arrangements based on different perceptions of global realities were emerging.

But long before the challenge was upon us, we correctly read the inexorable course of global affairs. Before events could make the decisions for us, weundertook the necessary effort of seizing control over our foreign policy and of revising the very framework of our relations with the rest of the world, it was action necessitated and engendered by the thrust of domestic policies toward independence, innovation, and total self-reliance.

Identifying geopolitical realities and national priorities, we shaped the cornerstones of a new foreign policy. The first and most fundamental of these stressed the supremacy of national interests in the conduct of foreign affairs.

Secondly, we stressed the need for flexibility and pragmatism in our diplomacy, to encompass not merely our hopes for peace and security, but our wry aspirations to development- And thirdly, we stressed the need for contacts with all nations desiring our friendship on the basis of mutual respect and mutual benefit.

In our relations with the Western countries, particularly the United States with whom our ties are deep and strong, we have sought and found a new relationship compatible with emerging realities in Asia and in our respective circumstances. We have just entered, a crucial stage in the renegotiation of our Mutual Defense Agreement, our bases treaty, our military assistance agree­ment, and our economic ties.

With Southeast Asia, with whom we seek the deepest and closest ties, we have developed and contributed to the building of a strong regional association in the Association of Southeast Asian Nations. The historic agreements in Bali this year are the culmination of almost a decade of nurturing Southeast Asia’s essential homogeneity, and the commencement of a regional effort that is of far-reaching value to the security and development prospects of all Asian peoples and countries.

With the Socialist world, we have forged vigorous and harmonious relations with the great majority of Socialist countries, including the People’s Republic of Soviet Socialist Republics which I visited this year, and the Socialist Republic of Vietnam whose delegation headed by Vice Minister of Foreign Relations Pham Hien visited with us the other month after which visit normal diplomatic relations between our countries were established. Differences of ideology have in no way constricted the possibilities of com­merce and cultural exchange, and we are finding with every passing year that these countries provide new markets and sources of supply of enormous signif­icance to our development effort.

With the Japan, the European Economic Community, and the industrialized West, we have continued to nurture a strong and close relationship, particularly in trade and investments. From these countries have flowed substantial capital investments in the national economy that make them truly effective partners in our bid for national development.

Finally, we have closely identified ourselves with the cause of the Third World countries in seeking a new international economic order and in improving upon the system of cooperation among countries of similar circumstances and aspirations. With these countries we have found a coalition of interests and aspirations that is perhaps the most important phenomenon in international affairs today. We have sought to forge the same ties with the Islamic countries, with countries in the Middle East, in Africa and in Latin America.

For beyond the memories of shared social experiences and of shared des­titution and misery, we have in association found the levers for creating changes in our conditions and in terms of international economic life.

Barely a year ago we hosted the historic Ministerial Conference of the Group of 77, which prepared the position of the Third World for the United Nations Conference on Trade and Development. Last May, it was our great privilege to present to that conference the Declaration and Programme of Action in the UNCTAD meeting in Nairobi.

The sum of these initiatives in foreign policy is a diplomacy placed at the service of national development, and imbued with a vision of the interdepend­ence of nations. In four years we have constructed methodically a network of relations with many countries that confers benefits upon the national life and that in no way has endangered our sense of well-being and security.

And more than this, we have won for ourselves and our nation the respect and the goodwill of the great majority of the human family. And that is not a mean achievement at a time when many speak of competition among the na­tions for the resources of this planet.

We have made ground-breaking progress in all these spheres of national life, because we have a Government that truly governs. Behind every stride we have taken in securing the peace, in spurring the economy towards growth, in spreading the benefits of growth among our people, and in promoting our commerce and contact with the rest of the world is the recovery and the strengthening of political will in this country.

For the conditions that invoked the martial necessity derived from a long period of decay in our political system and political institutions. All the sound and glossy qualities of democratic process that marked our political life for generations were merely the crust of an unequal political order which proved finally unable to respond to national realities and problems. As vested interests manipulated the apparatus of power and the disaffected majority agitated for some measure of political control, our government steadily drifted towards paralysis and in many cases abdication. We have sought to reorganize government as I have stated at the beginning of this speech.

Perhaps the most important aspect of reorganization was the creation of the National Economic Development Authority which gathered under one roof the planning of national development. From this office have originated the plans and programs of our New Society.

The merit of this new administrative structure has been fully shown, in the operations of our various programs. Admittedly, there is need for more managerial skills which take time to generate. But the new orientation is there; the capacity to act is there; and the sense of a single organization at work marks the government we have in our country today.

The harmonious flow of policies to programs, of responsibilities from the Presidency of the smallest Government unit, underlies at root, the progress we have made in our national development program.

Allied with the responsibility of government to plan and manage national development is the task to generate and harness resources effectively. And thus we have raised the revenues of government from P1.0 billion in 1965 when I look over the Presidency to P16.5 billion in the just concluded fiscal year.

Without the efforts to increase the fiscal base of the economy, the accomplishments of government in the field of public investments would have been severely curtailed. The limits of our efforts must necessarily be circumscribed by the extent to which we improve the base of government in­come.

During the last four years, public investments have been poured heavily into public services especially into the infrastructure development program which are designed to expand the productive capacity of the economy. Public investment expenditures have risen to about 38 percent of the total expenditures of the national government. In the earlier years of my administration, the most that we could reach was close to 20 percent. In a period of four to five years, we have doubted public investment in infrastructure development.

In 1976 alone, total national government spending has amounted to P23.2 billion. Of this, public infrastructure programs have received an allocation in excess ofP8 billion. Included here are not only the all-important farm to market roads, which became a total link between farmer and consumer, but irrigation, electrification and water resources projects. By the end of 1977, we expect to have established one electric cooperative in each province. By 1984, we should be able to energize all the barrios; and total electrification should come by 1990. As of now, our electrification program has registered 65 electric cooperatives, serving 386,363 homes in 361 municipalities. In waterworks, 68 projects have so far been identified; 30 of which are programmed for implementation within the next two years. The plan is for investments in these areas to grow over time as the development program accelerates.

But where have we spent all this money? Significantly, there has also been a clear shift in the regional pattern of public investments. In the Fifties and Sixties, public investments were concentrated in Region IV, comprising Southern Luzon including Metro Manila, which received on the average almost half of total public investments. From FY 1971 to 1975, the region’s share in public capital expenditure has declined to only about 28 percent of the total, without any decrease in the actual amount involved. In per capita terms, it ranked only fourth, trailing Regions III (Central Luzon), VIII (Eastern Visayas) and II (Cagayan Valley).

This is seen in the simultaneous development of regional integrated projects, such as the ones in the Bicol river basin area, Mindoro, Cagayan Valley, Panay Island, Samar and Leyte, Zamboanga and other parts of Mindanao.

The decline of the importance of Region IV derives from the decline of per capita public investments in the Metro Manila area—notwithstanding the fad that here, in this prime city of the Philippines, we see the most palpable examples and manifestations of government expenditures. In FY 1972, per capita expenditure in the Metropolis was P33.60. In FY 1975, this went down to P23.41. On the other hand, for the rest of the Philippines the public investments rose from P20.21 in FY 1972, to P90.00 in FY 1975. This is by way of a rejoinder to those who think that all the public money having been spent only in Metro Manila.

The pattern of revenue utilization exemplifies the basic spirit of our national development program—the emphasis on the demoralization of wealth, the regionalization of growth, and the linkage of all sectors of the national eco­nomy. We seek in the plan the regeneration not of just one part, but of the whole society and the whole economy. And no region, no community, no individual has been left out from the compass of the entire development effort.

This shift of expenditures to the rural areas has brought about a strong government presence in places where there hardly was any perception of it before. The establishment of the regional offices of all the departments of government proved to be far-sighted.

What are the future perspectives? Let me quote the recent World Bank country report. And I quote: “There is little question,” says a recent World Bank country report, “that the Philippines has the physical and human resources required for the sustained economic improvement during the next few decades and its more equitable distribution. Moreover, recent economic and social reforms have contributed to a policy environment more conducive to sustained economic growth . . .”

But what we have achieved is simply part of the initial stages of our total national development. We must plan ahead and so what are these plans in the years ahead?

By 1980, we should expect the basic infrastructure of growth to be completed, linking the fanner, the small industries and the consumers to the total domestic economy. By the year 2000, we should have attained our objective of integrating our socially fragmented nation, through our socio-economic and political programs, the development or adoption of institutions and appropriate technologies to ensure standards of harmony and well-being within the national community.

At the end of the millennium, our population shall have increased to 83.4 million people. Although, as the Family Planning program puts it, we are trying to bring this down to 55 million. This will need an annual GNP growth rate of 7 per cent in real terms to support reasonable living standards. Energy con­sumption alone will rise to five times the level of our consumption in 1975. As fossil fuels from outside sources are depleted, we will need to develop our own resources. We will need an added hydro-electric capacity of at least 5,400 megawatts, nine times our present capacity of 600 mw., or three plants of 300 mw. each being put on stream every four years. Of geothermal resources, we will need some 80 plants of 55 mw. each to meet our target of 400 mw. by year 2000. We have just started to put 255 mw. generators in Tiwi and 2 in Bae, Laguna. We will need 14 million metric tons of coal, which means 20 mines regularly producing 2000 tons per day. Uranium exploration should intensify to support the nuclear power subsystem, where we will need three to four additional units of l.000 mw. each to meet our requirements. Oil drilling must produce at least 250 wells over the next ten years. This energy development program is expected to cost S24 billion over the next 25 years.

In agriculture, we must realize at least a 4 per cent growth in food production during the next decade, by expanding arable and harvested areas, and increasing yields. To attain increased productivity we well have to adopt or develop new and appropriate technologies, organize and manage more efficiently our extension services, commit large-scale investments to water re­sources, fertilizer, communication and transport, and rationalize pricing.

We must also utilize an increasing part of our resources to farm the seas for the “blue revolution” of the immediate future. There are those who have misgivings about increasing our food production because of the inadequacy of our land area. This year, we are starting the farming of the sea. With relatively productive marine resources in an area of 1,655,300 square kilometers we should be able to bring about such a revolution, just as in the last ten years we were able to bring about through our high-yielding varieties, the green revolution.

In industry, we must support our objective of higher industrial growth with investments in relatively labor-intensive finished consumer goods industries, the second stage of import substitution for selected intermediate and capital goods industries, and the generation of exports. We must create sufficient jobs to absorb the present ranks of the unemployed, and the 400.000 annual addition to the labor force. Public investments must increase to about 5 per cent of the GNP by 1980, particularly in the area of housing. There must continue to be reform in taxation to reduce the heavy dependence on international trade and correspondingly widen the domestic base as well as improve the social equity of the entire tax system.

In government, reorganization must continue as a constant mechanism for envigorating me bureaucracy. The planning capacity of Government, beginning at the center and including its various departments and agencies, should improve, training of middle managers should continue to be upgraded, systems of rewards and punishment and of enlarging accountability instituted. Public corporations should encourage greater public participation, and local participation in the decision-making process should continue to broaden.

To keep pace with the changing rural to urban profile of our communities, we must exert every effort to liberate these communities from blight, conges-lion, and hazards; bring about the optimum use of land as a welfare rather than as a commodity for trade; preserve a desirable balance between the natural beauty of our land and waters on the one land and the claims of technology on the other; and bring about the best possible inter-relationship among the various communities and the regions.

By 1980, it is predicted that Manila may have expanded so much that it may include Infanta, Quezon province. This will be a city, therefore, two sides of which are harbors. One on the Pacific Ocean and one on Manila Bay or the China Sea side.

By the year 2000, Manila Bay should not be polluted. By the year 1980, we should be half-way with the reclamation of 100,000 hectares in the northern part of Manila Bay, part of which should be utilized for high quality marine products in sea farming, in the fishponds that shall be allocated thereat. Bataan may have developed into an industrial area, Cavite and Batangas into tourist recreation resorts. A canal may have been dug at Atimonan, a 7-kilometer canal across the isthmus from the Pacific Ocean to Tayabas Bay, thus shortening the way for ocean-going ships travelling from the Pacific to Manila Bay.

Education must continue as a high priority, not only within the schools, bin outside the school system. This calls for a more judicious use of public media and other facilities in the task of adult, or out-of-school education. Through vigorous educational campaigns, we should succeed in orienting our popula­tion to our increasing social development goals. By 1985, we should succeed in reducing the population growth rate to about 2.4 per cent, if not less, and in eliminating wasteful and dangerous consumption habits particularly in food, energy, space, water and air.

We should in all aspects of our national life seek to promote more vigorously the ethic of self-reliance, from security to technology, from agri­cultural to industrial production.

As I see it, this decade and the next will set the stage for expanding our country’s productive infrastructure. We shall witness new gains in agriculture, the development of higher standards in our manpower, the institutionalization of development management in our public and private sectors, a common thrust toward full agro-industrial modernization. We shall see new levels of income, rationalization of our technological problems and capabilities, new standards of living, and a different quality of life, particularly among those who live a marginal social existence as of now.

We have the natural resources, we have the manpower. We have the programs and above all, we have the political will.

Let us without equivocation unite behind these programs. They deserve the support of all. For whatever we achieve tomorrow can only mean progress if it transforms the life of the poor. Our task is to see within the shortest possible time the final emancipation of the poor of our country.

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